Quorum Health Corporation: Strategic Management and Financial Analysis

The firm strategy is the formulation and execution of the action plan that leads to the success of the organization. For instance, the organization may form strategic alliances, adapt to the local norms according to the customers' demand and specification and improve in innovation and technology. Businesses set goals which need strategic planning and management to achieve them. Financial strategy on the hand is the creative way of using the financials tool to maximize the shareholders' wealth. Successful implementation and assessment of the tools for strategic management are essential in the determining the growth of the organization. In this report, the firms' strategy, the financial analysis and the implementation of the strategies identified are discussed. Further, the scorecard of the strategies is evaluated to determine the success of the business organization. To this end, the report chose the Quorum Health Corporation (QHC) as a firm to demonstrate benefits of firms' strategy, financial analysis and implementation of the selected strategies.

A brief Description of the QHC

QHC is a health organization that provides health services in the United States and other countries. The organization provides both inpatients and outpatients health care services. The facility deals with various health conditions such as specialty surgery, emergency rooms, critical care, internal medicine and other health-related services (Ellen et al., 2014). The organization is based in the New York, United States. The organization was founded in the year 2015 and it has grown tremendously. Currently, QHC has other subsidiaries such as Quorum Health resources and LLC in other parts of the United States and other countries in the world.

Firm's Strategy and Financial Analysis

The firm's strategy involves the mission statement that acts as a guide to the direction of the organization should take to achieve its goal. QHC being a new establishment has experienced rapid growth over the last three years due to its strategic management (Rutterford & Upton, 2006). The mission statement that propels the organization is creating a sustainable future for the healthcare organization. The vision statement is to be a dynamic and integrated professional services Company that delivers innovative and quality services through experience and leadership.

Business model

The business model is a plan that outlines the procedures and policies on how the businesses raise and spend the revenue. The component of the business model for the QHC is the strategy, product differentiation, and the operation.

Strategy description

Some of the QHC business strategies are forming strategic alliances to increase the market share and reduce the cost of operation and closing non-performing hospitals. The following are some of the strategies that have enabled the organization to expand its market horizon. First, the organization has improved their financial results where the underperforming hospitals are closed to reduce the overhead costs and to increase efficiency. This is arrived at after performing financial analysis of various affiliated healthcare facilities, the demographic factors and the nature of the competition in the market. Therefore, the decision is made based on the data which makes the decision more accurate and timely. Secondly, the portfolio has been refined to include high-quality and profitable health care services. The hospital hires a quality health worker who obeys the professional ethics which leads to customer satisfaction. The organization has also enhanced the patient's safety, satisfaction, and quality of the healthcare services provided. The hospital also conducts periodic surveys to understand areas that need improvements and to know the views of the patients. Finally, the organization has also improved the operation efficiency through acquisition that has led to higher profit margins. The managers are given the autonomy that enables them to implement policies and procedures that are aligned to the organizational objectives.

The customer value prepositions of the QHC products are that the services are of high quality, affordable and available. The customers find this preposition useful since it is only the QHC that provides acute health care services in 20 markets. The organization also believes in the satisfaction and the customer feedback. In this regard, the organization has a customer care center that addresses the issues raised by the customers. Moreover, the organization also applies advanced technology in diagnosis and other health care services so that quality and relevant health care services are offered to patients.

Differentiation of services

The organization has sustained the stiff competition in the health sector in the United States due to the differentiation strategy of its services. The services of the Company have been differentiated from the other competitors in the following ways. First, there is s strong presence in the community that makes the services available for the locals. In so doing, the locals are provided with employment opportunities and quality health care in their doorsteps. Secondly, the organization has geographical diversified its portfolios. For instance, by 31st December 2017, the organization had 31 hospitals located across 15 states in the United States. The geographical portfolios are strategic and respond to the community health needs and the challenges in the health sector in the United States.

Third, there is an excellent record of the clinical quality, safety, and patient experience. The organization provides high-quality services at a low cost that makes the services affordable to all social stratification. There has a drastic reduction of serious safety events and the data that was reported on the 30th September 2017 show that there was a reduction of serious safety events by 92% compared to the year 2013. Finally, the organization has also experienced and dedicated management team that ensures that the plight of the customers is taken with the seriousness it deserves.

Operations

The organization ensures that the cost of production is maintained low so through the use of technology and organizational culture. For instance, the organization has a strong culture that enables employees to be accountable and reduce chances of embezzlement of funds. The supply chain transparent and strategic ensuring that the flow of the drugs and other services are not affected by any supply logistics (Sama & Nyuyen, 2008). Moreover, there is efficiency in operation, strong internal controls that ensure that the organization complies with financial and non-financial issues such as the inventory and other assets. The quality control is also strong to detect any defect products at an earlier stage that results to reliability and adaptability of the organizational services. The organization structure is transparent and less bureaucratic enabling deliveries of services as quickly as possible. Moreover, the operation sets clear expectation to the team which is achievable, having a clear process and soliciting feedback from team members are the operational activities in the QHC. This has enabled the organization to maximize shareholders wealth thereby reducing the agency conflict.

Financial Analysis

Profitability

This report compared the financial statements of QHC of 2017 and 2016 for which formed the base of the analysis. From the comprehensive income statement, the organization reported total net revenue before provision of bad debts as $2,327,655 in 2017 and $2,419,053 in 2016. This shows that there was a reduction in revenue in 2017 as compared to the base year 2016. The reason for the decline in revenue was that there was increased voluntary medical services that were offered to the patients who were facing financial difficulty. There was a program that was launched by the organization of providing free medical services to the vulnerable communities as a competitive strategy. The organization has reported a negative profit for both 2017 and 2016. For example, the net loss in the year 2017 financial year was $114,190 and $347,688 in 2016. It can be noted, however, that there was a general improvement in profitability as shown in the loss reported in the two financial years. In 2017, QHC made less loss than in 2016 and therefore the negative profit is an indication of the sunk costs that are still being carried forward given that the organization has been operating for only three years.

Efficiency

Efficiency is measured in terms of the cost of production. For example, the lower the cost of production the more efficient the firm is perceived to be. In the financial statement, there is a general decrease in the operating and expenses cost. For instance, in 2017, the total operation costs was $2,084,315 compared to $2,424,099. The liquidity ratio also measures the ability to for the firm to pay obligation as they fall due without affecting the inventory. The liquidity ratio was about 1.23 for the two periods indicating that the organization was more efficient in its operation.

Return on investment

The financial statement reveals that there was no net profit reported for the period 2017 and 2016 and therefore there was no return on investment. However, there was a positive indication that the business realizes growth and in three years the organization would be able to break-even.

Firm strategy Implementation and Balanced Scorecard

Trends and major competitors in the health industry

According to the Centre for Medicare and Medicaid Services (CMS), the expenditure of the health care services in the United States had increased by 4.3% representing $3.3 trillion. The health care industry exhibit the perfectly competitive market structure since there is no barrier to entry. According to the United States Department of Statistics, the number of hospitals doubled between 1999 and 2009 showing that there was no restriction to entry (Abraham et al., 2016). The study also found that the increases in hospitals in the United States lead to the increase of patients and therefore, there is a likelihood that the healthcare sector will continue to expand. This finding is in agreement with the QHC which was just started in 2015 and now has subsidiaries in over 20 states showing the nature of demand of the health care services. The healthcare corporations that compete for the QHC are the Brookdale Senior Living Inc., Community health system Inc., Diversicare Healthcare services among others (Mick, 2014). The competition has improved the level of technology and service delivery such as mobile clinics and other online diagnoses which have spread globally.

Critical success factors

The organization has intensively invested in research and technology to improve the quality of the services. The organization also hires the young talents that ensure that the objective of the organization is met. In addition, the organizations form strategic alliances in order to increase its market share.

Firms' strength and weaknesses

The firms' strength is its strategic alliances and the service differentiation that has enabled it penetrates various markets both at the local level and abroad. However, the organization experiences inflations and other legal issues that affect its operations. However, the lack of enough capital for expansion is the major challenge given that the organization is only three years old.

The competitive threat

Most established firms provide their services below the competitive market price hence posing a competitive challenge. In addition. There are competitors that use unhealthy competition such as destructive advertising. The organization solves this problem by merging and acquiring various entities.

Opportunities for the competitive advantage

QHC enjoys excess demand given that it is the largest healthcare provider that offers acute and general health services in community level. This has made it establish its base thereby giving it a competitive advantage. The organization also launched a free treatment program that has made the organization to be a household name.

Ethical and social responsibility issues

The organization adopted the compliance program that ensures that employees are both professional and ethical while discharging their duties (Logue, 2015). In addition, the organization launched charity health care services for social responsibility as the way of giving back to the society.

Business risks

The QHC faces risks related to laws and regulations governing the industry, security markets, the Spin-off, market, liquidity, operation, and interest rate risks. The organization has put in place measure to ensure that these risks are identified in time and they are either reduced or averted.

Customer Analysis

Customer value proposition

The organization ensures that the customers' needs are met by offering quality services affordability and timely service. The services are also available in rural areas that make services more accessible (Ferreira et al., 2018).

The customers

The customers are the patients who suffer from acute illness and other general diseases that may require specialized treatment such as surgery, transplant and another diagnosis. The government is also a customer especially for consultation services (Ferreira et al., 2018).

Firm's important market strategies and segments

The market strategy for the QHC is the divesting in underperforming portfolios and forming of alliances so as to reach a wider market (Logue, 2015). The market segment is the rural and other remote places where other health providers have not penetrated and also the online platform through the launch of the social platform where patients can interact with physicians.

The size of the market and the market share

The organization controls over 20 states in the United States and has a market share of about 30%. According to the Department of Statistics in the United States, QHC was controlling significant market share, especially in acute and general health care services that it dominates.

New products in the market

In the year 2017, the organization introduced electronic records keeping improving both efficiency and service delivery. The patients are now able to get their medical report online and seek medical checkup online thereby serving transport expenses to the customers.

Firms key value drivers

The values that drive the growth of the QHC is the excellent customer service, high quality of the services rendered and compliance of the law and regulations governing the health sector. In addition, it has experienced and dedicated management team that ensures that the services rendered are of high quality, professional and ethical.

How key drivers affects sales, growth, and profit.

The excellent customer service has increased sales and the quality. Experienced and dedicated management has resulted in the organizational growth due to limited fraud and embezzlement of funds (Purdue University, 2000). The efficiency of debt collection has resulted in high profit over the years.

Balanced scorecard and strategy map

The strategic management system that QHC adopted is presented below.

The scorecard above shows that QHC adopted the strategy encompasses the customer satisfaction, financial strength, efficient internal processes, and organizational capacity.

Conclusion

Strategic management is very essential for businesses and QHC has shown progress in penetrating new markets. Strategic alliance and adaptation to the local setting are strong drivers for the success of any business organization.

References

Abraham, K. G., Mackie, C. D., & National Academy of Sciences (U.S.). (2016). Beyond the market: Designing nonmarket accounts for the United States. Washington, D.C: National Academies Press

Ellen, Kendall, Xee Media., & Excellence in Training Corporation. (2014). The quality transformation in health care: The Parkview experience. Worcester, MA: Ellen Kendall Associates.

Ferreira, G. S. A., Silva, U. R., Costa, A. L., & Pádua, S. I. D. D. (2018). The promotion of BPM and lean in the health sector: main results. Business process management journal.

Logue, D. E. (2015). The WG & L handbook of financial strategy & policy. Boston, Mass.: Warren, Gorham & Lamont.

Mick, S. S., & Shay, P. D. (2014). Advances in Health Care Organization Theory. Hoboken: Wiley.

Purdue University. (2000). Strategic management journal. New York, NY etc.: John Wiley.

Rutterford, J., & Upton, M. (2006). Financial strategy. Chichester: Wiley.

Sama, M., & Nguyen, V.-K. (2008). Governing health systems in Africa. Dakar, Senegal: Council for the Development of Social Science Research in Africa.